Shares of Veeco Instruments Inc. climbed almost 6 percent Wednesday, to $20.92, after the maker of equipment used in manufacturing light-emitting diodes, computer and TV displays and hard disk drives announced it was aiming to trim $10 million per year in research spending.
The Plainview company, Long Island’s 15th largest by 2015 sales, said the cost reductions would be in addition to previously announced restructuring plans designed to save $20 million per year.
The cuts will be made in research into atomic layer deposition, or ALD, a process used in making semiconductors and in producing organic light emitting diodes for television and computer displays.
“While we have continued to make progress with our ALD technology development for advanced semiconductor applications, the expected timing for revenue realization has been delayed,” John R. Peeler, chairman and chief executive, said in a statement. “We plan to retain the intellectual property and technology capabilities and continue to assess future market opportunities.”
In a research note Wednesday, Stifel, Nicolaus & Company, Inc. analyst Patrick Ho called Veeco’s actions to de-emphasize ALD “a positive move” and predicted that the company will seek to diversify through mergers or acquisitions.
Veeco also said that it would take third quarter charges of between $56 million and $62 million, or $1.44 to $1.59 per share. About $2 million of the total is related to restructuring, the company said, while the rest is attributed to write-downs of atomic layer deposition assets.
Shares of Veeco rose 5.8 percent.
A company spokesman said some in the company’s 20-member ALD research team in Fremont, California, would be offered jobs in Plainview, where a scaled-down research effort would continue.
The Fremont office will continue to operate as a site for sales and service teams, he said.
Veeco entered the ALD market through the September 2013 acquisition of Fremont-based Synos Technology, Inc. for $70 million to $185 million, depending on performance milestones.
Veeco also said that third quarter revenue is expected to be at the high end of its previously announced range of $70 million to $85 million as demand for the company’s LED products improves.
The company plans to issue third quarter financial results on Nov. 1.